I recently had a meeting with a financial adviser to discuss saving some money each month. After the meeting, he sent me a short letter suggesting that I should take out a 25-year plan with Friends Provident International. I am planning to return to the UK within 10 years, so I am concerned about the length of time the plan will run. When I queried this, I was told that it would not be a problem to continue with the plan once I am back in the UK. The adviser has been quite pushy and I am concerned about the advice I have been given. Could you please confirm if I am being told the right things? ODDubai
I do not think that a 25-year plan is appropriate given your circumstances. If the plan matures or is encashed once you are a UK resident, you will be liable to income tax on the proceeds. For this reason, it is better that the plan has a much shorter term and matures before your return. As you will then have been a non-resident for many years, you will be able to take the proceeds back to the UK without charge. Once you are a UK resident, you can then invest in tax-efficient plans. Sadly, too many sales people push long-term plans as they pay much higher commissions than similar ones with shorter terms.
I returned to the UAE from Australia at the end of 2006, having previously been employed in Abu Dhabi from 2002 to 2005 by both a private department and then a government organisation. I moved back with my family and only after returning was I presented with my contract, which I duly signed. In March this year, I resigned from the government body to take up employment in the private sector. It transpired that the contract I had signed was an all-inclusive contract that included such things as service benefits, school allowances and furnished family accommodation. Regardless of this, my line manager assured me that I would receive an end-of-service gratuity. On this understanding, I agreed to continue providing professional services to my previous employer until such time as an adequate replacement was recruited. Five months later, I have been informed that no end-of-service payment will be forthcoming, yet I have effectively been providing an on-call service for the past few months. I realise that I signed the contract and yet my manager, realising the disparity between it and the other contracts, undertook to guarantee an end-of-service payment, a claim that has subsequently been rejected. They are sticking to the letter of the contract and yet furniture in the accommodation I was provided with had to be replaced at my own expense as it was broken or non-functional. The contracts we were provided with were termed "special" contracts, which effectively meant that the government body could treat us as they wished. I am not being greedy, but would appreciate receiving the same benefits as my erstwhile colleagues. DMAbu Dhabi
This is an unusual situation. The employment contract that is valid will be the one that is lodged with the Ministry of Labour and this is generally done at the start of employment as it is a legal requirement to do so. It is unusual for a contract to state that an end-of-service gratuity is to be waived unless alternative benefits, such as pension contributions, are to be provided. If, however, someone has signed and accepted such terms, then they will be legally binding. While the reader could take the case to the Ministry of Labour, I doubt that he will get anywhere as he accepted the terms. As for the issue of replacing furniture at his own cost, unless compensation was agreed at the time, then there is really nothing he can do to be reimbursed. The lesson to be learnt, albeit harsh, is that employment contracts are binding and they should never be signed unless you are happy with the terms offered.
I have been working in Dubai for almost 18 months as a receptionist. I resigned on October 18 and gave the required 30 days' notice to my employer. I signed a new contract with another company shortly afterwards and the contract stated that the work would commence on November 13 for training, with the job itself starting a week later. I told the new company that I had to work out my 30 days' notice when I signed the contract. I now want to back out as I cannot leave my current job early and am not sure that I now want the new job. When I rang the human resources department at the new company, they got very angry and said they would sue me. The person then demanded that I pay them Dh3,000, although I haven't started work with them. I need to know what my rights are if I do not want the job. Can they sue me or make me pay Dh3,000? With the response I have received from the new company, I am now certain I do not want to work for these people. However, I am worried about what they may do to me. MWDubai
Unless MW has signed a contract that states that she must pay the employer should she terminate employment, she is not legally bound to make any payment to them. The UAE Labour Law allows for a probationary period and during this time either party can terminate the employment, usually without notice. It is understandable that a company is unhappy about someone signing a contract then backing out as it is very inconvenient to them. Technically not taking up employment could be deemed breach of contract, but taking action via the courts would be very costly and I cannot see that it would be worth their while to do so for someone in a junior position.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Write to her at email@example.com with queries for this column or for advice on any other financial planning matter.